EURGBP is still moving inside its range on the 4-hour time frame, currently testing the resistance at the .7400 major psychological level. An upside break might be possible since stochastic is climbing while the 100 SMA just crossed above the 200 SMA.
In that case, EURGBP could climb by an additional 300 pips, which is the same size as the rectangle formation. However, if the resistance continues to hold, price could fall back to the range support around the .7000 major psychological level. RSI is pointing down, indicating that bearish momentum is present.
Event risks for today include the release of the Spanish unemployment change report, which is expected to show a 35.3K increase in joblessness after printing a 74K drop last time. As for the UK, the construction PMI is up for release and it might indicate a climb from 57.1 to 57.6, reflecting a stronger pace of expansion in the industry.
Data from the UK came in weaker than expected yesterday, as the manufacturing PMI fell from 51.9 to 51.5 instead of holding steady. Euro zone data came in mostly stronger than expected, with Germany showing a 7K increase in employment and Italy reporting upbeat jobs data as well.
Later this week, the UK is set to print its services PMI and might show a climb from 57.4 to 57.6. This report tends to have a stronger impact on pound price action since the services sector takes up a larger share of overall economic activity. Stronger than expected data could mean more gains for the pound and a move lower for EURGBP while weak readings could spur a pound selloff or an upside break for EURGBP.The ECB rate statement might also serve as a strong catalyst for price action, although no actual monetary policy changes are expected.